Rep. Nugent opposes proposed federal minimum wage hike

Published: Saturday, November 16, 2013 at 5:51 p.m.

Last Modified: Saturday, November 16, 2013 at 5:51 p.m.

Democratic lawmakers in Washington are maneuvering for an increase in the federal minimum wage.

The main proposal — the Fair Minimum Wage Act — would boost the rate from the current $7.25 an hour to $10.10 an hour. The bill would spread out the increase over three years, in annual increments of 95 cents an hour, and allow for subsequent yearly cost-of-living adjustments.

If passed, it would be the first minimum-wage increase since July 2009, which was the last year of three consecutive annual increases enacted by former President George W. Bush in 2007.

The plan, however, faces a challenge in gaining Republican support in the Senate — opposition that is reflected among local GOP lawmakers.

Bloomberg.com pointed out in a recent report that the federal minimum wage hit its peak purchasing power in 1968, when it was $1.60 an hour.

Had it been indexed with inflation at that time, the report noted, today's rate would be $10.77 an hour — or $22,402 a year.

As it stands, a full-time worker making the current minimum wage pulls down $15,080 a year.

The proposed jump contained in the Fair Minimum Wage Act would lift that worker's salary to $21,008 a year.

Hundreds of local workers could benefit from a higher rate, government data indicate.

Federal census estimates for incomes in 2012 show that about 7,450 full-time workers in Marion County made $14,999 or less last year.

That's about 9.7 percent of the 77,000 full-time workers who cashed a paycheck in 2012, reports show.

The Census Bureau notes that 8,655 families in Marion made less than $15,000 in 2012, or about 9.9 percent of those who reported income last year.

In Alachua County, according to government estimates, roughly 5,530 families — or 10.9 percent of the total — earned $14,999 or less in 2012.

Among individual full-time workers in Alachua, about 4,680 employees — or 6.3 percent — made less than $15,000 last year.

Critics have longed maintain that raising the minimum wage, which began in 1938 at 25 cents an hour, costs jobs.

In the past, the rationale was that employers would lay workers off to counteract higher personnel costs.

Lately, though, the so-called job-killing aspect has taken on a new wrinkle.

In Washington, D.C., for example, Mayor Vincent Gray earlier this year vetoed a measure that would have required large retailers to pay workers 50 percent above the local minimum wage.

Gray did so after Walmart, which opposed the plan, threatened to halt construction of new stores in the district.

Proponents of a higher minimum age, however, have started disputing that argument.

They point to studies by economists that show a higher minimum wage has little impact on employment of workers who rely on it, typically those considered low-skilled or young people in their first job.

Last February, for example, the Center for Economic and Policy Research, a progressive think tank in Washington, released a report that reviewed results of two studies that analyzed the aggregated findings of dozens of previous studies on the minimum wage conducted since the early 1990s.

The research, the report said, "concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers."

"The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms' overall costs and only modest relative to the wages paid to low-wage workers," the paper continued.

Employers, it concluded, opt for other "channels of adjustment" to compensate, such as reducing hours or non-wage benefits, cutting pay of higher-paid workers, increasing productivity or prices to consumers, or just accepting smaller profits.

The report noted that the "most important" influence for workers and employers alike was that employee turnover was reduced, which produced "significant" savings to companies.

U.S. Rep. Rich Nugent, a Brooksville Republican whose district includes the city of Ocala and most of Marion County, invoked federalism in expressing his skepticism toward a minimum wage boost.

"This is a classic example of when I think certain policy decisions are best left up to the states," Nugent said in a statement to the Star-Banner.

"Every state in the Union has a different cost of living and a different set of economic challenges to overcome. The constant one-size-fits-all approach to policymaking in America tends to have enormous unintended consequences. It's just not a good way to do things."

Some believe Nugent is right.

At the beginning of the year, according to the Bureau of Labor Statistics, 19 states and the District of Columbia had adopted a minimum wage that was higher than the federal level.

The highest was in Washington state, which called for $9.19 an hour and will up that to $9.32 an hour on Jan. 1.

Florida, which mandates $7.79 an hour, was also among them.

Bloomberg.com reported on Tuesday that five states — New Jersey, New York, California, Rhode Island and Connecticut — all adopted minimum-wage hikes this year.

New Jersey, where voters on Election Day overrode Gov. Chris Christie's January veto of a new rate, and New York now will join the other states with a minimum wage that exceeds the current federal level.

In a statement to the Star-Banner, U.S. Rep. Corrine Brown, a Jacksonville Democrat whose district encompasses part of eastern Marion and Alachua counties, called the minimum wage "stagnant" and argued it was overdue to be raised as income inequality widens.

"No one who works hard, takes responsibility and plays by the rules should be forced to live in poverty or struggle to pay the bills. Passage of the Fair Minimum Wage Act will strengthen our economy, enhance the economic security of our families and put more money in the pockets of those who need it most," Brown said.

Brown added that raising the rate was crucial for women, who make up almost two-thirds of minimum-wage earners, and said tying future increases to inflation would mean that the issue would no longer be "held hostage by partisanship in Congress or powerful special interests."

"Beyond a doubt, America's workers are the most productive and most innovative in the world, and they all deserve to earn a living equal to their efforts," Brown said.

<p>Democratic lawmakers in Washington are maneuvering for an increase in the federal minimum wage.</p><p>The main proposal — the Fair Minimum Wage Act — would boost the rate from the current $7.25 an hour to $10.10 an hour. The bill would spread out the increase over three years, in annual increments of 95 cents an hour, and allow for subsequent yearly cost-of-living adjustments.</p><p>If passed, it would be the first minimum-wage increase since July 2009, which was the last year of three consecutive annual increases enacted by former President George W. Bush in 2007.</p><p>The plan, however, faces a challenge in gaining Republican support in the Senate — opposition that is reflected among local GOP lawmakers.</p><p>Bloomberg.com pointed out in a recent report that the federal minimum wage hit its peak purchasing power in 1968, when it was $1.60 an hour.</p><p>Had it been indexed with inflation at that time, the report noted, today's rate would be $10.77 an hour — or $22,402 a year.</p><p>As it stands, a full-time worker making the current minimum wage pulls down $15,080 a year.</p><p>The proposed jump contained in the Fair Minimum Wage Act would lift that worker's salary to $21,008 a year.</p><p>Hundreds of local workers could benefit from a higher rate, government data indicate.</p><p>Federal census estimates for incomes in 2012 show that about 7,450 full-time workers in Marion County made $14,999 or less last year.</p><p>That's about 9.7 percent of the 77,000 full-time workers who cashed a paycheck in 2012, reports show.</p><p>The Census Bureau notes that 8,655 families in Marion made less than $15,000 in 2012, or about 9.9 percent of those who reported income last year.</p><p>In Alachua County, according to government estimates, roughly 5,530 families — or 10.9 percent of the total — earned $14,999 or less in 2012.</p><p>Among individual full-time workers in Alachua, about 4,680 employees — or 6.3 percent — made less than $15,000 last year.</p><p>Critics have longed maintain that raising the minimum wage, which began in 1938 at 25 cents an hour, costs jobs.</p><p>In the past, the rationale was that employers would lay workers off to counteract higher personnel costs.</p><p>Lately, though, the so-called job-killing aspect has taken on a new wrinkle.</p><p>In Washington, D.C., for example, Mayor Vincent Gray earlier this year vetoed a measure that would have required large retailers to pay workers 50 percent above the local minimum wage.</p><p>Gray did so after Walmart, which opposed the plan, threatened to halt construction of new stores in the district.</p><p>Proponents of a higher minimum age, however, have started disputing that argument.</p><p>They point to studies by economists that show a higher minimum wage has little impact on employment of workers who rely on it, typically those considered low-skilled or young people in their first job.</p><p>Last February, for example, the Center for Economic and Policy Research, a progressive think tank in Washington, released a report that reviewed results of two studies that analyzed the aggregated findings of dozens of previous studies on the minimum wage conducted since the early 1990s.</p><p>The research, the report said, "concludes that the minimum wage has little or no discernible effect on the employment prospects of low-wage workers."</p><p>"The most likely reason for this outcome is that the cost shock of the minimum wage is small relative to most firms' overall costs and only modest relative to the wages paid to low-wage workers," the paper continued.</p><p>Employers, it concluded, opt for other "channels of adjustment" to compensate, such as reducing hours or non-wage benefits, cutting pay of higher-paid workers, increasing productivity or prices to consumers, or just accepting smaller profits.</p><p>The report noted that the "most important" influence for workers and employers alike was that employee turnover was reduced, which produced "significant" savings to companies.</p><p>U.S. Rep. Rich Nugent, a Brooksville Republican whose district includes the city of Ocala and most of Marion County, invoked federalism in expressing his skepticism toward a minimum wage boost.</p><p>"This is a classic example of when I think certain policy decisions are best left up to the states," Nugent said in a statement to the Star-Banner.</p><p>"Every state in the Union has a different cost of living and a different set of economic challenges to overcome. The constant one-size-fits-all approach to policymaking in America tends to have enormous unintended consequences. It's just not a good way to do things."</p><p>Some believe Nugent is right.</p><p>At the beginning of the year, according to the Bureau of Labor Statistics, 19 states and the District of Columbia had adopted a minimum wage that was higher than the federal level.</p><p>The highest was in Washington state, which called for $9.19 an hour and will up that to $9.32 an hour on Jan. 1.</p><p>Florida, which mandates $7.79 an hour, was also among them.</p><p>Bloomberg.com reported on Tuesday that five states — New Jersey, New York, California, Rhode Island and Connecticut — all adopted minimum-wage hikes this year.</p><p>New Jersey, where voters on Election Day overrode Gov. Chris Christie's January veto of a new rate, and New York now will join the other states with a minimum wage that exceeds the current federal level.</p><p>In a statement to the Star-Banner, U.S. Rep. Corrine Brown, a Jacksonville Democrat whose district encompasses part of eastern Marion and Alachua counties, called the minimum wage "stagnant" and argued it was overdue to be raised as income inequality widens.</p><p>"No one who works hard, takes responsibility and plays by the rules should be forced to live in poverty or struggle to pay the bills. Passage of the Fair Minimum Wage Act will strengthen our economy, enhance the economic security of our families and put more money in the pockets of those who need it most," Brown said.</p><p>Brown added that raising the rate was crucial for women, who make up almost two-thirds of minimum-wage earners, and said tying future increases to inflation would mean that the issue would no longer be "held hostage by partisanship in Congress or powerful special interests."</p><p>"Beyond a doubt, America's workers are the most productive and most innovative in the world, and they all deserve to earn a living equal to their efforts," Brown said.</p><p><i>Contact Bill Thompson at 867-4117 or at bill.thompson@ocala.com.</i></p>